Contrary to our expectations, the UK’s Digital Economy Bill made it on to the British statute book! It received Royal Assent on April 8 – the Bill is now an Act of Parliament (a/k/a law).  I and many others were wrong in our belief that there wasn’t enough time to get it through parliament prior to the imminent election.

It emerged after a bizarre (but apparently legal) process, including the so-called “wash up”, where opposition parties allow the government to get its outstanding legislation on to the statute books prior to an election, having been through a rapid barter and trade of the contentious elements.

A significant outcome of this was the dropping of the “graduated response” (a/k/a “three strikes”) provision, in which repeat online copyright infringers would have their ISP accounts suspended or terminated.

It’s a wide ranging Act. Most of the provisions of this Act in relation to copyright appear to constitute amendments of other statutes and are to be found in Clause 17.

The Act implements some but not all of the recommendations in the Digital Britain report. In that respect, it’s the legal manifestation of a political report, drafted with insufficient scrutiny in the parliamentary process. It is 60 pages long, although only a minor part relates to intellectual property.

The relevant parts cover continuingly controversial provisions giving a Minister the power to order internet service providers (ISP’s) to take technical measures against subscribers – the most obvious being suspension of online access – in order to tackle online copyright infringement. The Minister is also empowered to make regulations giving the courts the power to order blocking injunctions on specific websites. Maximum fines for copyright infringements are standardised and increased. The public lending right is extended to cover publications in non-traditional formats such as e-books.

The Act gives ISPs the responsibility of notifying subscribers of any copyright infringement, initially identified by rights holders.  ISPs will be obliged to react to copyright infringement reports from rights holders – containing evidence that a user has engaged in some form of piracy – by notifying the relevant users of these reports. ISPs will effectively have to pass on warnings to their customers in writing encouraging them to lawfully access material rather than break the law. The courts will clearly have a significant amount of interpretation to do. Some provisions are aimed at gathering data, which facilitates the UK government’s intention to ensure that any legal changes have bases in evidence. This comes at a time when many are questioning the validity of the evidence (e.g., loss of revenue) used to persuade Members of Parliament that action was initially required.

The ISPs are required to maintain anonymous user-specific records of their notifications, so as to assist rights holders in identifying the serial offenders, against which the rights holders can take further action (once they have obtained a court order for a particular user’s identity). The instigator of the action is the rights holder and not the ISP. In that respect the ISP is an agent.

The anti-piracy measures that impose these obligations on ISPs are unworkable and unenforceable until private industry or Ofcom, the UK communications regulator and main regulatory agent for this bill, draws up a new code that will dictate how they work in practice. This process will not commence until after the General Election – and may not finish until the end of this year 2010, or early next year in 2011.

The Minister also has the power to intervene in the operation of internet domain registries.

This may result in the development of later sanctions against internet users. This could involve an order for ISPs to impose technical measures on rogue users, such as throttling their bandwidth or, in the extreme, suspending a user’s service. While these sanctions are some of the more controversial aspects of this Act, the earliest they would be seen is over 12 months from when the Code comes into force – which would be around the first quarter of 2012 at the earliest, and even that is not certain. Ofcom must also initially assess whether such measures are required, although the final decision rests with the Minister, which is subject to approval by both Houses.

Users will have the usual rights of appeal to a tribunal against both copyright infringement reports and any technical measures imposed upon them. Should an ISP fail to comply with a technical measure, it could be fined up to £250,000. ISPs are not happy about this, to say the least.

Blocking injunctions are a further possibility. These uncertain and significantly opposed provisions in the Act give the Minister powers to request a court to issue a blocking injunction, which would require ISPs to block access to websites used in connection with the infringement of copyright. These provisions appear widely drafted and it remains unclear what effect will be given to them – it appears to be a catch-all backstop should other provisions prove inadequate or unworkable.

Although any provision will require approval of Parliament and a 60 day review period before it comes into force, a full scrutiny of such provision (as is usually the case with primary legislation) will not be required. This appears a move away from traditional law making and again towards the use of executive powers.

Further measures in the Act include enforcement tariffs such as fines. The penalty for online and physical copyright infringements under the Copyright, Designs and Patents Act has been increased from £5,000 to a maximum of £50,000.

The Act has ducked the issue of orphan works.

Rights holders will naturally be happier now that there is a new scheme on the statute book for combating online piracy. This is a significant achievement for them.

Whether it has the effect of changing behaviour and being effective in addressing copyright theft remains to be seen. That copyright theft is a crime has been reinforced and that is an important statement.

What the Act is unlikely to do is to have a huge effect on dedicated internet pirates, who will be innovative in bypassing the technical measures and hiding their identities. The UK Courts are prepared to find internet service providers liable for the infringements of copyright committed by their users.  Should blocking injunctions emerge, they may go a little further to solving that problem.

Even then this new law would have to be understood, respected and obeyed by every citizen and employee in the land – that’s a tall order!

The UK Digital Economy Act is an inelegant and incomplete piece of work, whatever your views are on the substance and provisions; it may be a case of acting in political haste to repent at leisure amid the bureaucracy. It’s been a controversial journey on a route to who knows where.

I anticipate a significant stream of clarifications and interpretations as enforcement takes hold.  Moreover, should the opposition party win the imminent election, then Ofcom is due for a major shakeup and significant downsizing, which will limit its ability to give effect to the provisions of the Act. Nevertheless, the opposition party supports the need to reduce piracy; it’s a question of how.

The government has clearly listened to the rights holders and decided to accept the relevant recommendations contained in the various reports that have been published (Gowers, Digital Britain). The rights holders are happy; the ISPs and various other stakeholders are disappointed.

The new component dealing with British intellectual property legislation has comparatively few friends other than rights holders, judging by public comment. Most people remain understandably ignorant and confused. Significant education will be required.

It has achieved the unstable and uncomfortable position of having one part of the IPR value chain pitched against another on issues of legality and enforcement, with citizens’/human rights possibly caught in the middle. Concerns remain over its impact on consumers and ability to cut piracy.

It’s a step into the unknown.

Bill Jones is CEO of Global Village Ltd.